Management Practices and Savings Level among Members of Deposit Taking Savings and Credit Co-Operative Societies in Nyeri County, Kenya
Karoki, Serah Nyamweru
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Savings are critical drivers of growth and are required for the long-term viability of pension plans and the international trade balance. One of the key goals of the SACCO movement is to mobilize savings. However, despite having the largest SACCO sectors in the world, available data shows there is a low personal and household savings rate in Kenya. The majority of Kenyans do not have a savings culture and live each day as it comes. Kenyans are thought to save only 12% of their incomes on average, which is insufficient to support any serious investment in any sector of the economy. The current study therefore sought to assess the influence of savings and credit co-operative societies’ management practices and savings level among members in Nyeri County. The objectives of the study were to determine the influence of income level reviews on the level of savings, to find the influence of innovative savings products development on the level of savings, to examine the influence of interest rate decisions on the level of savings and to determine the influence of credit availability disbursement on the level of savings. This study was guided by the permanent income hypothesis, diffusion of innovation theory, asymmetric information and loanable funds theory of interest. The study adopted a descriptive cross-sectional survey research design. The target population was 156,000 active individual members of the 8 deposits taking SACCOs in Nyeri County. The sample of size was 400 respondents derived purposively. To obtain data, the researchers employed a standardized self-administered questionnaire. A pre-test was undertaken in deposit-taking SACCOs in Murang'a County to determine the instrument's reliability and validity. The data was analysed using descriptive and regression analysis. In the analysis, the Statistical Package for the Social Sciences (SPSS) version 24 was utilized. Tables and figures was used to present the data. Majority of the members indicated that the level of income affects their saving behavior and household savings behavior is influenced by the household head's income and age. Majority of the members argued that the savings products were not tailored for different income groups and age groups since the Saccos are clustered as per their original Sacco members. A moderate number felt that their Saccos offered point of sale service but the downtime of the point of sale service platform also affects their savings pattern since some transactions were not real time. The members strongly agreed that in some of the savings products the rate is not negotiable. The results indicated that majority of the members were not aware of existence of the interest and dividend policy. The management put more emphasis on the back-office deposits other than the front office savings when granting credit facilities. Majority of the members agreed that loan to deposit ratio/multiplier was applied when granting credit facility. There was a strong positive relationship between the independent variables and dependent variables as presented by the correlation coefficients of 0.818 (R=0.818). The relationship between credit availability and savings level was positive and significant (B=0.977, sig=0.000). The study concluded that there was a positive significant relationship between income level reviews, savings product development, Interest rates decisions, credit availability disbursement and member’s savings level in the SACCOs. The study recommended that short-term promotional incentives may be one strategy to encourage people to save more, although evidence on their effectiveness is limited. The study recommends to SASRA to accommodate the total savings and deposits when ranking the performance of deposit taking Saccos other than considering only the total assets parameter.